(This is CNBC Pro’s live coverage of Friday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) An industrial giant and Chinese electric vehicle play were in focus among Friday’s analyst calls. JPMorgan upgraded shares of General Electric to overweight. Meanwhile, Deutsche Bank initiated Li Auto with a buy rating. Check out the latest calls and chatter below. All times ET. 6:23 a.m.: RBC upgrades Carvana to sector perform from underperform RBC Capital Markets is betting that a bright outlook could push Carvana higher from here. The firm upgraded shares of the automobile e-commerce platform to sector perform from underperform. Analyst Brad Erickson more than doubled his price forecast for the stock to $90 from $45, implying that shares could rise 13% from here. Carvana has already rallied an eye-watering 50% this year. CVNA YTD mountain CVNA year to date “We believe CVNA’s recent run has the potential to trade even higher before reasonable valuations may matter again making risk/reward on an Underperform rating infeasible for the foreseeable future,” Erickson wrote. The analyst added that an “extremely favorable” setup in Carvana’s unit acceleration could push the stock “well above” $100. Meanwhile, he believes that analysts may be underestimating the company’s amount of cash generation per car. “Investors routinely note the company burns significant cash/ car when normalizing for quarterly fluctuations in inventory and timing differences between finance receivable originations and sales,” he noted. “After spending time with the company, it appears further adjustment below the operating cash flows is necessary to reflect steady state operations and points to modest cash burn in Q3 and cash generation/car in Q4 steady state,” the analyst added. Although Carvana owes an estimated $7.4 billion in the next seven years, Erickson believes the company’s improvements in per car profitability could provide some leeway to cover future debt costs. “This, combined with any further rise in the stock would become self-reinforcing, enable improving access to refinancing and reduces any lingering future liquidity concerns even further,” he added. — Lisa Kailai Han 5:56 a.m.: Oppenheimer downgrades Figs as near-term challenges linger Time to move to the sidelines on Figs , according to Oppenheimer. The firm downgraded shares of the health care apparel company to perform from outperform. Analyst Brian Nagel accompanied this change by removing his price target for the stock, which was previously set to $9. Figs is down 23% this year, but Nagel still doesn’t believe the stock has presented an attractive enough entry point for investors to buy in. “While the valuation of FIGS tracks well below recent highs, multiples for shares are not necessarily ‘washed out’ and still somewhat susceptible to further unfavorable rerating amid prospects for ongoing, nearer-term fundamental malaise,” he wrote. While Nagel remains constructive in the long term on Figs, he said the company faces too many internal and external challenges in the near term to ignore. “2024 is shaping up as another post-pandemic, transitional year for FIGS, impacted by stepped up, somewhat ‘catch up’ related, outsized investment spending, and still sluggish purchasing activity, on the part of core consumers,” he wrote. “While we are optimistic that sub-algo trends in 2024 are likely to give way to strengthening dynamics in subsequent periods, we are hard-pressed, at least at this juncture, to envision meaningful upside to current subdued, nearer-term forecasts and guidance for FIGS,” Nagel added Nagel thinks these concerns will translate to EBITDA margins slowing to 11-12% in 2024, down from 15.8% in 2023. Additionally, he also expects the company’s top-line expansion to be depressed. — Lisa Kailai Han 5:48 a.m.: Morgan Stanley upgrades UBS to overweight, cites pickup in investment banking activity A pickup in investment banking activity could lead to big windfalls for UBS , according to Morgan Stanley. Analyst Giulia Aurora Miotto upgraded the bank stock to overweight from equal weight. U.S.-listed shares of UBS have edged nearly 4% lower this year, but Miotto thinks they could recover as the bank finally realizes the tailwinds from its acquisition of rival Credit Suisse. UBS YTD mountain UBS year to date “2024 and 2025 will be transitional years as UBS executes on the merger with CS,” she wrote. “But our analysis suggests that cyclically the stars are aligned for IB and WM to outperform, leading UBS to beat rebased estimates.” Miotto expects a strong comeback of the investment banking pipeline in 2024 and 2025, and predicts that cash will flow away from the money market into fixed income first and then equities. “We think these trends are very supportive to UBS’s business model and are not captured in consensus yet (we are 20% higher on IBD revenues for UBS),” she added. Meanwhile, UBS’ wealth management business is a fantastic driver over the long run. “Long-term, we like the exposure to Wealth management, where we see structural growth coming from global wealth creation, vs a more muted outlook for European banks,” the analyst said. — Lisa Kailai Han 5:41 a.m.: Deutsche Bank initiates Chinese electric vehicle manufacturer Li Auto as buy Li Auto looks primed to capitalize on the growing Chinese electric vehicle market, according to Deutsche Bank. The bank initiated coverage of the Chinese electric vehicle manufacturer at a buy rating. Analyst Bin Wang cited the company’s market positioning as one of its greatest catalysts and called it a top pick. “Li Auto is the largest 6 / 7 seater vehicles manufacturer in China with a 13.8% market share in 2023, which is the sweet spot of the automobile electrification mega-trend in China,” he wrote. Wang noted that the firm is slated to enter the pure electric vehicle market this month with the Mega MPV, its new flagship vehicle. Li Auto also plans to strengthen its position as the second-largest plug-in hybrid electric vehicle maker through the launch of its L6 large-size SUV next month. Li Auto is also emerging as an industry leader in the AI-powered autonomous driving field, Wang added. Additionally, the company had the highest gross margin among China new energy vehicle manufacturers, with the figure coming out to 21.2% in the first half of last year. “This is a result of Li Auto garnering a higher average selling price (ASP) from its 6 / 7 seater vehicle segment exposure and best-of-breed execution efficiency, which leads to a lower-per-unit fixed cost than peers,” Wang said. U.S.-listed shares of Li Auto have slipped close to 3% this year. — Lisa Kailai Han 5:41 a.m.: JPMorgan upgrades GE to overweight General Electric has been on a roll recently, and JPMorgan expects the outperformance to continue. The bank upgraded the conglomerate to overweight from neutral. It also hiked its price target to $180 from $166, implying upside of 13%. “It is clear that GE is the premier large cap name in Comml Aero with regard to 1) the business, 2) where that business is in the cycle, 3) the balance sheet, and 4) the mgmt team,” analyst Seth Seifman wrote. “Some of this is priced in and valuation is an obstacle … but it is the only obstacle for us right now and with upside remaining, we think the companys fundamental strength wins out,” Seifman added. “Vernova looks promising as well based on rebounding margins and cash flow, as well as diversified exposure to the long-term energy transition.” GE shares rose 1% in the premarket following the upgrade. Year to date, they are up more than 30%. DIS YTD mountain DIS year to date — Fred Imbert
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